Author: Shiloh Hills
When you open a new debit account, it can be difficult to understand where to begin. It may also be difficult to understand how different it is from a savings account if you. are switching from savings to a debit account.
This post explains what a debit account is, and some helpful tips to get the most out of your new debit account.
What is a Debit Account?
A debit account is an account that allows you to use the money you deposit into it to pay for goods and services. A checking account is most similar to a debit account because, unlike a savings account, it allows you to use a debit card and checks. Checking accounts are primarily for daily money access, giving you access to your money whenever you need it.
Is a Debit Account a Debit Card?
While most debit accounts provide access to debit cards, they are not the same thing. A debit account is primarily an account that allows you to access your money via deposits, withdrawals, online payments, and bill pay services. A debit card, on the other hand, is a payment card that is linked to a financial institution and allows you to withdraw cash from an ATM or pay for goods and services at retailer stores
Steps to Take When you open a debit account
While most banks promise minimal fees for debit accounts, those fees can quickly add up. Here are some steps you can take to reduce the monthly operating fee of your new debit account
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Make Use of Direct Deposit
Direct deposit can be beneficial if you want to reduce your bank maintenance fees. Simply designate your debit account as the one into which your regular payments, such as paychecks, pensions, and social security, are deposited. You should check with your bank to know if they offer a fee waiver for regular direct deposits.
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Link Your Accounts
Most banks will waive your account fees if your combined balance from multiple accounts exceeds the bank’s threshold. This is known as a relationship waiver. Mortgage, brokerage, and IRA accounts are all eligible for a relationship waiver.
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Consider a Rewards Debit Account
Compared to a standard account, you have a better chance of receiving higher interest rates with a debit account. To earn higher interest rates, you must meet the following criteria:
- Enroll in electronic statements.
- Use your debit card at least 12 times per month.
- Monthly direct deposits of at least $500.
Final Words
If you need to access your money daily, a debit account is a good option because it gives you access to a debit card and checks. To reduce the charges on your debit account, consider linking your accounts and using direct deposits when you need to pay into the account. You could also look into rewards accounts to get higher interest rates.